In Chicago, High Rents Drive Home Sales

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Residential sales in Chicago jumped 22.4 percent in 2012, but price gains still lagged the national average, a new study shows.

The median home sales price in Chicago was $185,000 at the end of 2012, up 5.7 percent from the previous year, according to Jameson Sotheby's International Property's annual report. Overall the national median price for a home was up 6.3 percent, but many markets posted double-digit increases, the National Association of Realtors reported.

Prices in San Francisco, for example, were up 24.6 percent in February, compared to a year earlier. Overall prices in Illinois were up 7.7 percent.

"Chicago is lagging behind this trend, but we see the same factors in our market that created these increases in other cities," Jameson Sotheby's reports.

The Chicago sales increase was partially fueled by a spike in rental prices, which made home-buying an economical alternative. In 2012 Chicago homes yielded the best price-versus-cost-of-renting ratio in the history of the city, the report says.

"Rents have skyrocketed, making the prospect of home buying more attractive," the report says.

By year-end, Chicago's inventory of homes for sale was down to 3.4 months, a 73 percent decrease from the end of 2011, a familiar trend around the country.

Prices in Chicago are still down 35 percent from the peak in 2006. But the average time a home spent on the market decreased from 161 days to 136 days, Jameson reports.

Jameson reported a 55 percent increase in overall residential and commercial sales transactions for the year. The trends has carried over into 2013, with January sales up 21 percent from 2012.